Concern over federal Labor's quiet extension of mandatory income management - ABC News & Headlines – Australian Broadcasting Corporation

Josie Douglas says with the recent changes, NT residents will remain under compulsory income management for the next decade. (ABC News: Christopher Fitzpatrick)

The federal Labor government has broken an election promise by extending compulsory income management.

Aboriginal groups and other experts say the scheme is discriminatory and people should be given the choice to opt in to have welfare payments quarantined for essential items.

The Community Affairs References Committee will examine the legislative changes tomorrow. 

The federal Labor government has extended a scheme which sees part of the Centrelink payments of 30,000 Territorians compulsorily quarantined for essential items, despite many experts claiming the practice is discriminatory.

Social services, Aboriginal organisations, politicians and human rights groups have raised the alarm over a federal government extension to compulsory income management via the BasicsCard, despite a 2022 election promise to abolish the system, which also blocks the purchase of items like tobacco and alcohol. 

The BasicsCard has been described as discriminatory. (ABC News: Emilia Terzon)

In 2022, while in opposition, the Australian Labor Party said they would "scrap the discriminatory Cashless Debit Card and make the BasicsCard voluntary for those individuals or communities who wish to keep a form of income management". 

But four years on from the promise, in June 2026, the federal government quietly extended income management legislation until 2033 — repealing a clause that would have ended it in July this year.

Last week, the Greens' Penny Allman-Payne introduced a motion to stop the extension, which Labor and the Coalition voted against.

A number of stakeholder organisations have made submissions against the legislative extension, including the Central Land Council (CLC).

Josie Douglas says the Central Land Council is concerned the election promise has been delayed by federal Labor. (ABC News: Elsie Lange)

CLC general manager Josie Douglas said the organisation had been "long opposed" to compulsory income management.

In their submission the organisation says their position is "based on lived experience and awareness of the lack of evidence supporting its effectiveness as a social benefit instrument".

"The recent decision to remove the self-repeal dates from the legislation means that residents in the Northern Territory will remain under income management for the next 10 years," Dr Douglas said.

Compulsory income management was introduced as part of the Howard government's NT Emergency Response in 2007, also known as the Intervention, and is described by advocates as discriminatory since it disproportionately affects First Nations people.

The system quarantines a portion of a person's Centrelink payments for essential items and blocks the purchase of items like tobacco and alcohol.

A BasicsCard is a form of compulsory income management — it is a restricted debit card holding a portion of a person's welfare that is issued by the Australian government through Services Australia.

The federal government has quietly extended compulsory income management. (ABC News: Elsie Lange)

Whether a person is placed on compulsory income management largely comes down to where a person lives.

People are placed on the scheme automatically if they live in a declared area and receive particular kinds of welfare payments, or if they are flagged by social services.

The Cashless Debit Card (CDC), also known as the Indue card, however, was introduced nine years after the BasicsCard, and applied to a broader, more diverse group of jobseekers.

The CDC compulsory income management scheme became optional in 2022 and was abolished the following year.

The scheme has been highlighted by the government as a delivery of their election promises about welfare payments, but is separate to the BasicsCard, which remains in place and continues to disproportionately impact Indigenous Territorians.

In 2023, the old CDC system was turned into an 'enhanced income management' smartcard — those who were still on compulsory income management could switch to the new card, or stay on the BasicsCard.

According to the Northern Territory Council of Social Services, more than 30,000 people in the NT are still on compulsory income management, most of whom are Indigenous.

Australian National University social policy researcher Elise Klein who has been researching compulsory income management for a decade, said governments had not been able to provide evidence that the scheme helped meet social policy goals.

"There is really strong peer-reviewed research that shows that [compulsory income management] causes so much harm," she said.

"Researchers have shown a link between the BasicsCard and the reduced rate of weight of babies and school attendance, that research has been out for years now."

Elise Klein has been researching the compulsory income management scheme for more than 10 years. (Supplied)

She also said it raised human rights concerns, noting while it had been broadened out to include non-Indigenous people, at least 82 per cent of people on compulsory income management were Indigenous.

"You see that disproportionate impact, this racialised impact, still being lived today by people," Dr Klein said.

Dr Klein said Labor had laid the groundwork to break its 2022 election promise well ahead of the recent extension of the scheme.

"We've also seen in the federal government's budget an over $200 million commitment to income management arrangements over five years, and then after that, about $50 million thereafter," she said.

"So to me, that suggests a government forward planning to continue compulsory income management."

The CLC's Dr Douglas called for a "well-managed transition plan away from compulsory income management to a voluntary system".

"The transition plan must involve Aboriginal leadership and financial capability experts working in with the Commonwealth government to ensure that the right protections are in place for a voluntary system that will work," she said.

Federal Labor politicians say they stuck to their election promise by abolishing the cashless debit card in 2023.

"What we agreed to abolish was actually the cashless debit card, and that's what we took to the election, and that's the card we actually abolished," Minister for Indigenous Australians Malarndirri McCarthy said.

"There has always been the BasicsCard in place, we know that some forms of income management has to be there, usually through the courts, usually it's part of conditions for people either in family and domestic violence situations or in regards to legal circles."

Malarndirri McCarthy says Labor stuck to its election promise by abolishing the cashless debit card. (ABC: Matt Roberts)

Senator McCarthy said First Nations people had indicated at various points that they wanted to keep the BasicsCard.

In a statement, Social Services Minister Tanya Plibersek said the government had consulted with 81 communities and thousands of people on income management.

"These discussions told us that people want the government to work with them to create solutions, rather than make decisions for them," she said.

Ms Plibersek did not directly respond to questions from the ABC about why compulsory income management was extended indefinitely, why no announcement or justification was made, whether the government was committed to ending mandatory income management and its timeline to do so.

Speaking with ABC Radio Alice Springs on Wednesday, member for Lingiari Marion Scrymgour defended the use of income management in the NT, however she said she thought it should eventually be made voluntary.

Marion Scrymgour says compulsory income management ensures children have access to food and clothing. (ABC News: Pete Garnish)

"We've got to use income management when we've got families that have been struggling and doing it, and kids are suffering because they're not getting access to food and clothing and those things," she said.

"I think that income management should be part of the tool that is used with families."

The Community Affairs References Committee will examine the legislative changes on Friday, September 18.